Merck acquisition has potential to be ‘great deal,’ says Citi

Citi analyst Andrew Baum says Merck’s (MRK) acquisition of Prometheus (RXDX) has the potential to be a "great deal." Assuming the compelling efficacy and safety of PRA023 in ulcerative colitis and Crohn’s Disease is replicated in Phase III trials, PRA023 peak sales could exceed $10B given its potential in bowel disease, other autoimmune indications outside IBD, as well as combination therapy, the analyst tells investors in a research note. The firm estimates long term non-GAAP earnings accretion of 15% to 30% and keeps a Buy rating on Merck with a $130 price target.